Thekabarnews.com—Said Iqbal, president of the Confederation of Indonesian Trade Unions (KSPI) and special presidential advisor on employment and workers’ welfare, stated the global economic uncertainty that continues to burden the manufacturing sector in Indonesia could lead to the layoff of thousands of workers at several companies in East Java and West Java.

Said said he discovered the risk after making working visits with officials from the Manpower Ministry to industrial zones in East Java, West Java, and Jakarta. He visited several manufacturing companies. During these visits, he checked conditions and talked about employment challenges.

Geopolitical tensions involving Iran, the United States, and Israel had contributed to uncertainty in the world economy. Consequently, these tensions sent international oil prices and exchange rates fluctuating, said Said.

“Production has become pricier, and we have put more pressure on domestic industries. The impact of the global conflicts has been on Indonesian manufacturers in the form of higher costs of production and lower demand in the market,” Said said.

He remarked the situation has impacted two big categories of manufacturers.

The first group is made up of export-oriented industries, such as footwear and garment producers. These industries have been suffering from waning demand from overseas markets as global economic conditions deteriorate.

The second group consists of companies relying on imported raw materials. These producers have faced difficulties due to rising production costs from higher import prices and exchange rate fluctuations, Said said.

During his field inspections, Said said he found four to five companies that could be candidates for massive layoffs if the current economic conditions continue.

He became interested in companies such as PT Pakerin in Mojokerto, East Java. Said stated that the paper manufacturer has experienced a massive drop in business.

He said that only 20 percent of the factory’s production capacity was operational. Meanwhile, about 80 percent of its manufacturing activities were suspended.

Worried about the company’s condition, Said said he plans to report the issue directly to President Prabowo Subianto. In addition, he is also preparing to send reports to the State Secretariat and the leadership of the House of Representatives (DPR) in Indonesia. This is an attempt to push for a coordinated government response.

Said offered two potential solutions to help stem major job losses.

First, he urged the authorities to expedite the settlement of company funds that are still under the management process of the Indonesia Deposit Insurance Corporation (LPS). He explained that such action would help the employees get their outstanding rights and benefits faster.

Secondly, he advised the government to consider providing working capital assistance to firms experiencing short-term financial difficulties. He said more cash support can help businesses restart, maintain production capacity and reduce the chances of mass layoffs.

Indonesia’s labor-intensive manufacturing sector has been under increasing pressure recently as global demand fluctuates. Additionally, supply chains remain fragile, and geopolitical tensions continue to impact international trade.

During periods of global economic instability, labor unions have repeatedly advocated for increased state intervention to protect employment. At the same time, they push for maintaining industrial competitiveness.

While no final decisions on layoffs have been announced at the companies cited, Said emphasized that early government action is crucial to prevent broader employment disruptions. He added that such action would protect the livelihoods of thousands of Indonesian workers.

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